Notes to the Financial Statements
2012 At fair value
Freehold land and buildings 1,326.7 16.8 – – 158.6 161.8 (6.5) (1,650.1) 7.3
Leasehold land – – – – 3.1 288.7 – (291.8) –
1,326.7 16.8 – – 161.7 450.5 (6.5) (1,941.9) 7.3
2012 At fair value
Freehold land and buildings 1,062.5 37.0 (7.4) 0.7 165.0 75.3 (6.4) – 1,326.7
1,062.5 37.0 (7.4) 0.7 165.0 75.3 (6.4) – 1,326.7
The fair values of the investment properties above were estimated based on valuations by independent registered valuers. Valuations were based on market evidence of transaction prices for similar properties for certain properties and where appropriate, the investment method reflecting receipts of contractual rentals, expected future market rentals, current market yields, void periods, sinking funds and maintenance requirements and approximate capitalisation rates is used. The Group uses assumptions that are mainly based on market conditions existing at the end of each reporting period.
Investment properties comprise: Continuing operations
Name of building/location Description Tenure of land Net lettable area
No. 7, Jalan Kenari 5 Bandar Puchong Jaya 47100 Puchong Selangor Darul Ehsan
3½ storey shop office Freehold 1,650 sq. m.
No. 12, Jalan Anggerik Mokara 31/62 Kota Kemuning
Seksyen 31 Shah Alam Selangor Darul Ehsan
1½ storey terrace factory lot
Freehold 307 sq. m.
Notes to the Financial Statements
IOI Corporation Berhad
19. INVESTMENT PROPERTIES (Continued) Investment properties comprise (Continued): Discontinued operations
Name of building/location Description Tenure of land Net lettable area
IOI Mall
Bandar Puchong Jaya Puchong
Selangor Darul Ehsan
3 storey shopping mall Freehold 57,588 sq. m.
IOI Mall (new wing) Bandar Puchong Jaya Puchong
Selangor Darul Ehsan
4 storey shopping mall Freehold 22,662 sq. m.
Puchong Financial Corporate Centre (“PFCC”)
Tower 1 and 2 Bandar Puteri Puchong
Selangor Darul Ehsan
2 blocks of purpose-built office building
Freehold 34,980 sq. m.
IOI Boulevard Bandar Puchong Jaya Puchong
Selangor Darul Ehsan
104 units of commercial lot Freehold 26,184 sq. m.
IOI Business Park Bandar Puchong Jaya Puchong
Selangor Darul Ehsan
11 units of commercial lot and 902 car park bays
Freehold 1,649 sq. m.
Lot No. 40338 Mukim Petaling Selangor Darul Ehsan
Petrol station land Freehold 1,699 sq. m.
HS(D) 41529 PT No. 9411 Mukim Petaling
Selangor Darul Ehsan
Petrol station land Freehold 2,690 sq. m.
PT No. 82181 Lebuh Putra Utama Bandar Putra, Kulai Johor Darul Takzim
Commercial land Freehold 2,323 sq. m.
IOI Mall
Bandar Putra, Kulai Johor Bahru Johor Darul Takzim
3 storey shopping mall Freehold 23,027 sq. m.
IOI Mart
Taman Lagenda Putra Senai-Kulai
Johor Bahru Johor Darul Takzim
1 storey semi-wet market retail complex
Freehold 7,057 sq. m.
IOI Square IOI Resort Putrajaya
2 blocks of 12 storey office building
Freehold 30,852 sq. m.
IOI Corporation Berhad
19. INVESTMENT PROPERTIES (Continued) Investment properties comprise (Continued): Discontinued operations (Continued)
Name of building/location Description Tenure of land Net lettable area
IOI Resort Putrajaya
37 units of residential bungalow houses
Freehold 24,909 sq. m.
Puteri Mart Bandar Puteri Puchong
Selangor Darul Ehsan
1½ storey semi-wet market Freehold 4,265 sq. m.
Bandar Baru Salak Tinggi District of Sepang Selangor Darul Ehsan
Vacant land 99 years leasehold N/A
Lot No. 2012JP01 Jimei District, Xiamen Fujian Province
The People’s Republic of China
Vacant land for the proposed commercial and office development
40 years leasehold N/A
Investment properties under construction PFCC
Tower 4 and 5 Bandar Puteri Puchong
Selangor Darul Ehsan
Purpose-built office building Freehold N/A
IOI City Development IOI Resort
Putrajaya
Integrated mixed development including shopping mall and office building
Freehold N/A
20. GOODWILL ON CONSOLIDATION
Group
In RM million 2013 2012
At beginning of a financial year 512.0 512.0
Acquisition of a subsidiary (Note 40.1) 2.6 –
Reclassified to disposal group held for sale/held for distribution to owners (85.6) –
At end of financial year 429.0 512.0
The goodwill recognised on the acquisitions in previous years was attributable mainly to the skills and technical talents of the acquired business’s work force and the synergies expected to be achieved from integrating the company into the Group’s existing business.
Notes to the Financial Statements
IOI Corporation Berhad
20. GOODWILL ON CONSOLIDATION (Continued)
For the purpose of impairment testing, goodwill is allocated to the Group’s Cash-generating Units (“CGUs”) identified according to the operating segments as follows:
Group In RM million 2013 2012 Plantation 93.0 93.0 Property – 83.0 Resource-based manufacturing 336.0 336.0 429.0 512.0
Goodwill is tested for impairment on an annual basis by comparing the carrying amount with the recoverable amount of the CGUs based on value-in-use. Value-in-use is determined by discounting the future cash flows to be generated from the continuing use of the CGUs based on the following assumptions:
i. Cash flows are projected based on the management’s most recent three-year business plan and extrapolated to a period of ten (10) years (the average economic useful lives of the assets) for all companies with the exception of plantation companies. For plantation companies, cash flows are projected for a period of twenty-five (25) years (the average life cycle of oil palm trees). ii. Discount rates used for cash flows discounting purpose is the Group’s weighted average cost of capital. The average discount
rate applied for cash flow projections is 10.00%.
iii. Growth rate for the plantation segment are determined based on the management’s estimate of commodity prices, palm yields, oil extraction rates and also cost of productions whilst growth rates of other segments are determined based on the industry trends and past performances of the segments.
iv. Profit margins are projected based on the industry trends, historical profit margin achieved or pre-determined profit margin for property projects.
The management is not aware of any reasonably possible change in the above key assumptions that would cause the carrying amounts of the CGUs to materially exceed their recoverable amounts.
21. SUBSIDIARIES
21.1 Investments in subsidiaries
Company
In RM million 2013 2012
At cost
Unquoted shares in Malaysia 1,972.2 5,605.5
Unquoted shares outside Malaysia 2,396.1 2,356.6
4,368.3 7,962.1
Less: Accumulated impairment losses (5.6) (5.6)
4,362.7 7,956.5
IOI Corporation Berhad
21. SUBSIDIARIES (Continued)
21.1 Investments in subsidiaries (Continued)
Details of the subsidiaries are set out in Note 49 to the financial statements.
2013
During the financial year, the Company:
i. acquired 4,000 ordinary shares of RM0.50 each in IOI Properties Berhad (“IOIP”) (“IOIP Shares”) at an average price of RM2.90 per IOIP Shares with cash payments of RM11,600. The acquisition has no material impact on the Group’s financial statements.
ii. acquired 99,460,000 ordinary shares of HKD1.00 each in IOI Edible Oils (HK) Ltd at par value with cash payments of HKD99.46 million (equivalent to RM39.5 million). The acquisition has no material impact on the Group’s financial statements.
iii. acquired 2 ordinary shares of RM1.00 each in IOI Corporate Services Sdn Bhd at par value with cash payments of RM2.00. The acquisition has no material impact on the Group’s financial statements.
iv. acquired 2 ordinary shares of RM1.00 each in IOI Plantation Services Sdn Bhd at par value with cash payments of RM2.00. The acquisition has no material impact on the Group’s financial statements.
v. acquired 2 ordinary shares of RM1.00 each in IOI Properties Group Berhad at par value with cash payments of RM2.00. The acquisition has no material impact on the Group’s financial statements.
vi. acquired 2 ordinary shares of RM1.00 each in IOI City Holdings Sdn Bhd (formerly known as IOI Properties Holdings Sdn Bhd) at par value with cash payments of RM2.00. The acquisition has no material impact on the Group’s financial statements.
2012
During the previous financial year, the Company:
i. acquired 79,700 ordinary shares of RM0.50 each in IOI Properties Berhad (“IOIP”) (“IOIP Shares”) at an average price of RM3.33 per IOIP Shares with cash payments of RM265,580. The acquisition had no material impact to the Group’s financial statements.
ii. subscribed for an additional 2,500,000 ordinary shares of RM1.00 each in IOI Management Sdn Bhd at par value. The consideration for the subscription was settled by offsetting the amount due from IOI Management Sdn Bhd to the Company.
iii. received RM4,265 upon liquidation of a subsidiary, Tampoi Development Sdn Bhd. Total gain recognised from the liquidation was RM4,263.
iv. redeemed 55,000 redeemable preference shares of RM0.50 each plus a premium of RM99.50 each in Resort Villa Golf Course Development Sdn Bhd (“RVGCDSB”). The total redemption amount of RM5.5 million was settled by offsetting the amount due to RVGCDSB.
v. subscribed for 100,000,000 redeemable preference shares of RM1.00 each in Dreammont Development Sdn Bhd at par value. The consideration for the subscription was settled by offsetting the amount due from Dreammont Development Sdn Bhd to the Company.
vi. subscribed for 593,611,489 redeemable preference shares of SGD1.00 each (equivalent to RM1,474.6 million in total) in IOI Consolidated (Singapore) Pte Ltd at par value. The consideration for the subscription was settled by offsetting the amount due from IOI Consolidated (Singapore) Pte Ltd to the Company.
The effect of the liquidation of subsidiary is disclosed in Note 40 to the financial statements.
Notes to the Financial Statements
IOI Corporation Berhad
21. SUBSIDIARIES (Continued)
21.2 Amounts due from and to subsidiaries
The amounts due from and to subsidiaries represent outstanding amounts arising from inter-company sales and purchases, advances and payments made on behalf of or by subsidiaries. These amounts are unsecured and bear interest at rates ranging from 0% to 7.60% (2012 – 0% to 7.30%) per annum.
The non-current amounts due to subsidiaries are payable on a back-to-back basis with the corresponding borrowings of the Group. The current amounts due from and to subsidiaries are payable upon demand in cash and cash equivalents.
22. ASSOCIATES
22.1 Investments in associates
Group Company
In RM million 2013 2012 2013 2012
At cost
Shares quoted outside Malaysia 414.4 394.7 – –
Unquoted shares in Malaysia 42.0 89.1 20.4 20.4
Negative goodwill recognised in prior years 34.4 44.1 – –
490.8 527.9 20.4 20.4
Share of post acquisition results and reserves 306.5 289.2 – –
797.3 817.1 20.4 20.4
At Market Value
Shares quoted outside Malaysia 1,378.0 1,323.0 – –
Details of the associates are set out in Note 49 to the financial statements.
An associate of the Group was listed on the Singapore Stock Exchange Limited on 12 April 2012. The listing of this associate had resulted in a dilution of IOI Group’s interest in the associate from 36.05% to 30.44%. In relation to this, the Group had recorded a gain on dilution of interest in associate amounting to approximately RM124.5 million in its consolidated statement of profit or loss for the previous financial year.
22.2 Summary of financial information of associates
In RM million 2013 2012
Assets and liabilities
Total assets 4,145.7 3,942.2
Total liabilities 1,703.6 1,309.1
Results
Revenue 1,715.2 2,589.4
Profit for the financial year 220.1 367.1
IOI Corporation Berhad
22. ASSOCIATES (Continued)
22.3 Amounts due from and to associates
Amounts due from and to associates represent outstanding amounts arising from agency income, purchases and payments made on behalf of or by associates, which are unsecured, interest-free and payable upon demand in cash and cash equivalents.
23. JOINTLY CONTROLLED ENTITIES
On 14 May 2013, the Company proposed to demerge the property development, property investment and other property related businesses of the Group as disclosed in Note 47. The jointly controlled entities formed part of the assets to be demerged and is now classified as a disposal group held for sale/held for distribution to owners in Note 33.
23.1 Interests in jointly controlled entities
Group Company
In RM million 2013 2012 2013 2012
Unquoted shares, at cost 9.0 942.6 9.0 –
Share of post acquisition results and reserves (0.2) (98.4) – –
8.8 844.2 9.0 –
Amounts due from jointly controlled entities – 2,638.9 – –
8.8 3,483.1 9.0 –
Details of the jointly controlled entities are set out in Note 49 to the financial statements.
During the previous financial year, amounts due from jointly controlled entities represented outstanding amounts arising from the proportionate advances for the acquisitions and development of land in Singapore and China and for development expenses and working capital, which were unsecured, bore interest at rates ranging from 0.90% to 2.05% per annum and were not repayable within the next twelve (12) months.
During the previous financial year, guarantees given proportionally by the Group and the Company for credit facilities of jointly controlled entities amounted to RM1,044.1 million and RM907.7 million respectively.
Notes to the Financial Statements
IOI Corporation Berhad
23. JOINTLY CONTROLLED ENTITIES (Continued) 23.1 Interests in jointly controlled entities (Continued)
The Group’s share of assets, liabilities, income and expenses of the jointly controlled entities were as follows:
Group
In RM million 2013 2012
Assets and liabilities
Non-current assets – 1.1 Current assets 8.8 5,777.5 Total assets 8.8 5,778.6 Current liabilities – 2,157.3 Non-current liabilities – 2,777.1 Total liabilities – 4,934.4 Results Revenue – –
Expenses, including finance costs and taxation (0.2) –
23.2 Capital commitment of jointly controlled entities
Group
In RM million 2013 2012
Authorised capital expenditure of jointly controlled entities Contracted
– Property, plant and equipment 85.3 –
– Construction in progress – 1,234.4
IOI Corporation Berhad
24. DERIVATIVE FINANCIAL INSTRUMENTS In RM million Contract/ Notional amount Net long/(short) Fair value Financial Assets Financial Liabilities Group 2013
Forward foreign exchange contracts (1,542.3) 13.0 66.6
Commodity forward contracts 41.0 43.4 26.1
Commodity futures 112.8 2.9 3.6
Cross currency swap contracts 1,492.4 45.3 –
Interest rate swap contracts 2,145.3 – 55.9
Total derivative financial instruments 2,249.2 104.6 152.2
Less: Current portion (59.3) (96.3)
Non-current portion 45.3 55.9
2012
Forward foreign exchange contracts (2,106.9) 38.4 110.2
Commodity forward contracts 441.3 119.9 86.5
Commodity futures (122.2) 13.6 6.1
Cross currency swap contracts 1,982.5 67.1 –
Interest rate swap contracts 2,153.4 – 79.8
Total derivative financial instruments 2,348.1 239.0 282.6
Less: Current portion (171.9) (202.8)
Non-current portion 67.1 79.8
Notes to the Financial Statements
IOI Corporation Berhad
24. DERIVATIVE FINANCIAL INSTRUMENTS (Continued) In RM million Contract/ Notional amount Net long Fair value Financial Assets Financial Liabilities Company 2013
Interest rate swap contracts 1,909.8 – 52.8
Total derivative financial instruments 1,909.8 – 52.8
Less: Current portion – –
Non-current portion – 52.8
2012
Cross currency swap contracts 318.2 14.6 –
Interest rate swap contracts 1,917.0 – 74.9
Total derivative financial instruments 2,235.2 14.6 74.9
Less: Current portion – –
Non-current portion 14.6 74.9
i. Forward foreign exchange contracts
Forward foreign exchange contracts were entered into as hedges for sales and purchases denominated in foreign currencies and to limit the exposure to potential changes in foreign exchange rates with respect to the Group’s foreign currencies denominated financial assets and financial liabilities.
ii. Commodity forward contracts, swap contracts and futures
The commodities forward contracts, swap contracts and futures were entered into with the objective of managing and hedging the respective exposure of the Group’s plantation segment and resource-based manufacturing segment to adverse price movements in vegetable oil commodities. The fair values of these components have been determined based on published market prices or quoted prices from reputable financial institutions.
iii. Cross currency swap contracts
Currency swap contracts are used to hedge foreign currency exposures of borrowings. iv. Interest rate swap contracts
Interest rate swap contracts are used to hedge the Group’s exposures to movements in interest rates.
All the above derivatives are initially recognised at fair value on the date the derivative contract is entered into and are subsequently re-measured at fair value through profit or loss. The resulting gain or loss from the re-measurement is recognised in profit or loss. During the financial year, the Group and the Company recognised total fair value gains of RM130.4 million (2012 – loss of RM73.7 million) and RM22.1 million (2012 – loss of RM2.8 million) respectively arising from fair value changes of derivative liabilities. The methods and assumptions applied in determining the fair values of derivatives are disclosed in Note 45.6.
IOI Corporation Berhad
25. DEFERRED TAXATION
Group Company
In RM million 2013 2012 2013 2012
At beginning of financial year 356.6 403.3 6.1 6.3
Recognised in profit or loss
– Current year (12.6) (27.3) 0.2 0.1
– Prior years 11.7 (7.3) 0.1 (0.3)
(0.9) (34.6) 0.3 (0.2)
Acquisition of a subsidiary (Note 40.1) 14.1 – – –
Reclassified to disposal group held for sale/held
for distribution to owners (32.8) – – –
Foreign currency translation differences 4.1 (12.1) – –
At end of financial year 341.1 356.6 6.4 6.1
Presented after appropriate offsetting as follows:
Group Company
In RM million 2013 2012 2013 2012
Deferred tax liabilities 398.4 427.7 6.4 6.1
Deferred tax assets (57.3) (71.1) – –
341.1 356.6 6.4 6.1
Notes to the Financial Statements
IOI Corporation Berhad
25. DEFERRED TAXATION (Continued)
The movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows: Deferred tax liabilities
Group Company
In RM million 2013 2012 2013 2012
At beginning of financial year 427.7 453.0 6.1 6.3
Recognised in profit or loss
Temporary differences on accelerated capital allowances 2.4 (11.5) 0.3 (0.2)
Temporary differences on prepaid lease rental – 0.2 – –
Temporary differences on recognition of project expenses (0.1) (0.1) – –
Temporary differences on amortisation of fair value
adjustments on business combinations (3.2) (9.3) – –
Temporary differences on fair value adjustments
on investment properties 13.7 3.0 – –
Other temporary differences 1.4 0.1 – –
14.2 (17.6) 0.3 (0.2)
Acquisition of a subsidiary (Note 40.1) 14.1 – – –